Cheap shares are being bought on the falling stock exchanges, Barclays has found.
Savvy investors are snapping up bargains on the stock markets, new analysis from Barclays Stockbrokers shows.
Barclays' remarks were made in the wake of an unusually poor week on the London exchanges, which saw a three-figure drop on the flagship FTSE 100 index. The financial sector in particular endured big declines in value, with shares in troubled lending bank Bradford & Bingley now standing at just ten per cent of January 2008 levels; this occurred after a potential investor backed out of buying a 23 per cent stake in it on Friday.
A further record price registered in New York for a barrel of crude oil (over $146) deepened the gloom, as did unexpectedly poor trading results from iconic retailer Marks & Spencer.
However, Barclays' analysis shows that 60 per cent of its orders on one day last week were "buys" rather than "sells" - a figure that only declined to 53 per cent over Tuesday to Thursday. This means that many of the stock market investors who use the bank are continuing to buy up shares.
Henk Potts, equity strategist at Barclays Stockbrokers, explained: "Rising inflation, sky-high oil prices, falling house prices along with weak consumer and business confidence surveys are all conspiring to reduce economic growth prospects and push markets lower.
"However, against a backdrop of cheap valuations we still believe long term investors will benefit from exposure to shares. Therefore its good see that a significant majority of our self directed investors are seeing the current short term volatility as an opportunity."
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